Taking It Easy: The High Costs of Construction in Haiti

It’s hard to imagine, in a country where 80% of the population lives on less than $2 per day in relative terms (PPP), that the cost of 50kg of cement is roughly $8 per bag plus delivery; and standard materials, such as dimensional lumber in Haiti, cost as much or more than in the Eastern Seaboard of the United States.

It is hard to defeat assumptions about construction costs in low and middle-income countries as part of the process of development. This is particularly reinforced by the misconception that market forces will affect these costs at an equivalent to other adjustments that can be made based on relative poverty. Sectors such as agriculture, services, or basic commodities, have subsistence value or are readily adjusted through subsidies, import substitution policies or are part of social welfare programs. Construction, however, is a demand driven, competitive industry that is inelastic to surplus labor due to costs. This is a result of factors such as materials, transportation, skills, and education, as well as high opportunity costs and control by consortia.

These issues/realities are particularly compounded as a result of inflation, lack of resources and predatory practices within post-disaster conditions, exaggerating the damage, risks, and lifelong costs of disasters. Reconstruction and disaster risk reduction policies are increasingly part of the debate on sustainable development. Unlike other relief items, housing is a long term non-consumable asset, which is burdened by other questions of land ownership and legal entitlement, and so, falls outside the provision of humanitarian relief.

Currently, the median value of a 3 bedroom / 3 bathroom house just outside Port au Prince or in smaller precincts around Haiti ranges from $240-315K USD. Meanwhile, the majority of the population, particularly around PaP and Leogane are still living in shacks, T-shelters, or partially damaged buildings as a result of the earthquake.

Thought or Debate?

The need to connect development and humanitarian shelter strategies is particularly important in developmental economics. This is often referred to as ‘Linking Disaster Relief to Rehabilitation and Reconstruction’ (LDRRR). Income generating activities relate to equitable levels of distribution that rely on surplus productivity. Subject to per capita income distribution, for employees to receive their average product and not a marginal net zero or negative wage (as in subsistence or traditional economies, or if high intensity low wage production fails to increase domestic productivity or ‘reservation wages’ for the family unit or individual): what policies could help construct a more effective livelihoods strategy for informal settlements as well as disaster or conflict survivors, that is truly community driven?

Some would suggest that economic factors prevent housing from being treated as a basic human right. Yet socioeconomic and environmental issues demonstrate that adequate shelter is understood to be an integral part of economic growth. As of 2003, in Latin America, households need 5.4 times their annual income to purchase a house. In Africa, the average cost of a house is 12.5 times an average annual income – figures that are widening as a result of general inequality. The IDB study, ‘Estimating the direct economic impact of the 2010 earthquake in Haiti,’ suggests that the overall cost of the 200-250,000 fatalities combined with the losses in GDP and infrastructure, totals more than 7.2-8.1bn USD, stating historically that up to $13.9bn would be within statistical error , almost twice the entire GDP of Haiti.

Current discussion on resource procurement strategies and ‘best practices’ for donors / governments in post-disaster planning identify five factors that influence the availability of resources during reconstruction: work prioritization, pooling resources, lead time, existing contractual relationships, and transportation. Much like the Philippines’ race to utilize and preserve their coco-lumber industry as a result of Typhoon Yolanda, Haiti’s material imports, cement production, and transportation factors are still suffering from high stress as evidenced by the stripped down Mack Truck frames and half buried trans-axles littered around Port au Prince.

Michael Lieberman; Infrastructure Coordinator – Saint Marc, Haiti

archiveglobalTaking It Easy: The High Costs of Construction in Haiti06.30.2014